under a plan by the International Monetary Fund Managing Director, Kristalina Georgieva, to allocate $650 billion from international reserves to restore the world economy after the coronavirus crisis. Unlike the conventional IMF programs this money would not have to be paid back. The National Bank of Ukraine Governor, Kyrylo Shevchenko, announced the possible windfall yesterday following a meeting with Alfred Kammer, the Director of the IMF’s European Department.
“An easy $2.7 billion from the IMF might arrive in 2021…This allocation might be very helpful as Ukraine faces its next FX debt payment peak in September ($3.1 billion). However, such ‘windfall cash’ might finally erode the country’s motivation to proceed with the Stand-by Arrangement.”
“given the longer course of negotiations.” Ukraine has been in on-again, off-again talks with the IMF since last fall. He said that he hoped that the Rada will pass legislation in coming weeks so that Ukraine will meet the IMF’s compliance requirements. Failing that, he said: “These funds can be replaced by the placement of Eurobonds. We know that the IMF is not primarily about money, but about trust in the country. a strong signal to investors.”
up from its forecast of 3% made six months ago. World GDP is to increase by 6% this year, “reflecting additional fiscal support in a few large economies and the anticipated vaccine-powered recovery in the second half of the year,” the IMF wrote in its April World Economic Outlook Review. Last week, the World Bank raised its growth forecast for Ukraine this year to 3.8%. A Bloomberg survey of 13 economists has predicted a rate of growth of 4.4%. Ukraine’s Economy Ministry has forecast a 4.6% rate of growth.
Goesta Ljungman, the IMF’s resident representative, said in a lengthy interview with Interfax-Ukraine. “At this stage, it is not possible to make any predictions about when the review can be completed. This depends on how quickly there is progress on outstanding issues,” he said, referring to the Stand-By Arrangement that has been largely dormant since $2.1 billion was disbursed last June 11.
, Finance Minister Serhiy Marchenko said in a lengthy interview with LIGA. “We have no opportunity to receive income from another source,” he says. “The IMF program is our baseline scenario.” He said talks would go better with IMF if they were face to face, not through video calls.
he told reporters at a press conference on Tuesday. Anti-corruption policy and judicial reform remained outstanding issues in the talks, he said.
George Kent, U.S. Deputy Assistant Secretary of State for European and Eurasian Affairs, told VOA last week. Explicitly tying aid to free market changes, he said: “The expectations of Ukrainians and Americans are clear. Reform efforts need to continue and deepen. The justice sector is absolutely essential.” He added: “The U.S. as a partner is here to be supportive. But to be very clear, any legislation that rolls back the independence of organizations, whether it’s the National Anti-Corruption Bureau, NABU, or the central bank, does not help Ukraine and that will make it very difficult for international partners, whether it’s the IMF or the United States, to continue to be as supportive of efforts when they are not leading to reform the change that Ukraine needs.”
The total amount raised was more than three times the amount raised at last week’s auction. With two more weekly auctions scheduled this month, the Ministry is expected to cover the budget shortfall before the end of the year.
The Rada passed Ukraine’s 2021 budget yesterday. A fiscally conservative document with a deficit of 5.5% of gross domestic product, slightly less than this year. Finance Minister Serhiy Marchenko said the budget is a key step for Ukraine to get back on track with the IMF program agreed last June. He told reporters after the vote by parliament: “The budget is a marker showing that we can fulfill our obligations.”
The budget numbers:
In another move to get back on track with the IMF, the Rada overwhelmingly approved yesterday two bills to restore powers to a key agency of Ukraine’s new Western-designed anti-corruption machinery. Two months, ago the Constitutional Court stuck powers of the National Anti-Corruption Agency, a unit that was investigating at least three judges of the Constitutional Court. Oleksandr Novikov, head of the agency, said after the Rada votes: “The National Anti-Corruption Agency resumes all it operations in all major directions now.”
In Washington, Kurt Volker, former special envoy to Ukraine, warned that the incoming Biden administration will not give a free pass to the Zelenskiy administration due to Ukraine’s strategic value in blocking Russia. “Ukraine has to take responsibility for its own development – only Ukrainians can solve their own internal issues,” he said when asked at the Ukrainian Investment Roadshow if President-elect Biden will use ‘tough love’ to get Ukraine on the reform track. “Why should the IMF or EU would step in to help Ukraine, when Ukraine doesn’t deliver on its own commitments on reform, and the state bureaucracy is so dense that even capital ready to invest gets tangled up?”
Drought pushed down this year’s national grain harvest by 13% yoy, to 65.4 million tons, Igor Petrashko, minister of Economic Development and Trade, announced yesterday. The fall ended two years of record harvests – first 70 million tons in 2018, then 75 million tons in 2019. This year, Ukraine’s top volume crop, corn fell 17% yoy, to 29.8 million tons. Wheat, the second largest crop, fell by 10%, to 25.1 million tons.
Despite the drops, Minister Petrashko said the 2020 harvest is “three times more than the needs of the domestic market, and also allows us to maintain a leading position in the export of agricultural products.” With overnight frosts freezing the ground in some parts of Ukraine, winter sowing has been completed on 8 million hectares.
Thousands of small business owners and workers yesterday protested the impending coronavirus lockdown and end of tax privileges, blocking central Kyiv’s Maidan Square and Kreschatyk Street into the night. Reuters reported that one police officer was knocked unconscious and 40 others received chemical eye burns from gas. “Stop the Lockdown” was the slogan that brought small business people from across the nation to protest the January 8-24 lockdown. The protest is coordinated by ‘Save FOP’ a national movement of autonomous workers who want to forestall a Finance Ministry plan to require digital cash registers and tax receipts.
One quarter of Kyiv restaurants have closed permanently due to coronavirus restrictions this year, estimates a new study, “Consequences of the COVID-19 epidemic and quarantine measures for the leading sectors of the Ukrainian economy.” “In cities where there is less population, the situation is many times worse,” Marlin Tynny, owner of the Praha and Montecchi Capuleti restaurants, tells researchers. “Millions of people were left without a livelihood.” The 190-page study was prepared by the Center for Applied Research in cooperation with Ekonomichna Pravda and the Konrad Adenauer Foundation.
Kyiv City has the highest coronavirus infection rate of Ukraine, reports the Health Ministry. In the first half of December, Kyiv’s infection rate was 746 per 100,000 people. Close behind were: Cherkasy, Chernihiv, Sumy, Zaporizhia and Kyiv Region.
Almost one third of the Rada’s 424 members have had coronavirus since August, reports Dmytro Razumkov, chairman of Ukraine’s one chamber parliament. Currently, 21 MPs and 55 Rada employees are undergoing treatment, he said.
Fueled by foreign investors looking for high yields, the Finance Ministry sold a record $1.85 billion worth of government bonds at auction yesterday. Yields on hryvnia bonds ranged from 10% for 3-month bonds to 12.18% for 5-year bonds, the Ministry reported on Facebook. In addition to offering hryvnia bonds with seven different tenures, the Ministry offered 1-year bonds in dollars and euros. Investors bought $266 million worth of dollar bonds with 3.85% yields and €56.7 million worth of euro bonds with 2.5% yields.
Foreign shipping companies will be allowed to carry cargo up and down the Dnipro, under legislation approved by the Rada recently with President Zelenskiy’s backing. The goal is to triple annual river cargo to 30 million tons by 2024. “We need to build 250-300 new vessels,” Artem Kovalev, the Rada member who authored the bill, told UNIAN. “It is unrealistic to do this in a short time…so we have agreed to allow vessels flying a foreign flag to operate in our inland waterways.” Rebuilding river locks is to be paid through a new Inland Waterways Fund. This will be funded in part by 3% of customs duties paid by foreign flag ships using Ukrainian ports and by 45% of rent payments paid by hydro dams.
Ukrainians spent about $150 million last year to buy 3,200 apartments in Poland, making Ukrainians the largest foreign investor group in Polish residential real estate. The calculations were made by Gethhome.pl, based on data from Poland’s Interior and Administration Ministry. Ukrainians buy apartments to live in. Germans, the second largest foreign investor nationality, buy apartments as investments, reports PAP, the Polish Press Agency.
Low oil prices have saved Ukraine $3 billion so far this year, reports the State Customs Service. Through November, Ukraine oil import bill is down 36%, while the import volume is down only 5.6%. The top three sources of petroleum products are: Russia — $1.1 billion, or 35.9%; Belarus –$1.09 billion or 35.4%; and Lithuania — $360 million, or 12%.
Ukraine’s power plants reduced their coal consumption by 32% through October and increased their gas use by 31%, reports Expro.com, citing Energy Ministry numbers. Coal consumption fell to 14.1 million tons, while gas consumption rose 3.9 billion cubic meters.
Ukraine is gradually phasing out the use of coal, President Zelenskiy told a UN-sponsored gathering on Saturday, the International Climate Ambition Summit. Promising a “fair transformation of the coal sector,” Zelenskiy said in a recorded statement to the online gathering of Heads of Government that Ukraine will cut greenhouse gas emissions until reaching an ultimate goal of carbon neutrality. He blamed climate change for this year’s droughts that damaged crops across Ukraine and for forest fires in the east and floods in the west.
With demand dropping for coal, Ukraine’s coal mining industry is a shadow of its peak when it employed 500,000 miners, making Ukraine Europe’s third largest coal producer, after Germany and Poland. Last year, Ukraine’s production was 31 million tons – 17% the level of 1989. This year, it could fall to 25 million tons – the level of 1914.
All unprofitable mines will be closed in this decade, Olha Buslavets, first deputy Energy Minister said last week at the First German-Ukrainian Energy Day. “Unprofitable mines will be closed within ten years,” she said. “The minimization of subsidies to the industry from the state budget will take place in the coming years.” Addressing the challenge of retraining and relocating thousands of miners, she said: “Care must be taken so that no one is left behind. This is the motto of a fair transformation of the coal industry, laid down in the European Green Deal. This should happen with us, too.”
The EU is ready to help Ukrainian miners move out of coal, Torsten Wöllert, a European Commission energy official from Brussels, said at the Germany-Ukraine Day. “We are ready from the EU to help in this start together with the EU member states – Germany, Poland.,” he promised. “We will accompany Ukraine in this.”
At the German-sponsored Energy Day, Prime Minister Shmygal thanked Germany for its aid, saying “the project for a fair transformation of coal regions under the new energy partnership will begin this month: work will begin at two selected mines in the East and West of Ukraine.” Reflecting the shift in Ukrainian government attitudes toward coal, he said Ukraine will join a loose international grouping, the Powering Past Coal Alliance.
With the EBRD planning to invest up to $100 billion to help EU coal mining towns shift to new vocations through 2027, the Bank held an online conference Friday to promote a similar shift in Ukraine – the Platform Initiative in Support of Coal Regions in Transition in Western Balkans and Ukraine. “The EBRD confirmed its commitment to providing finance for investments that will support the transition from coal,” a Bank executive said at the meeting, organized with the World Bank, the European Commission and the Polish government. The ‘Just Transition Mechanism’ is designed “to support workers and citizens of regions where high-carbon assets are located.”
Polish tourists traveling to Chervonohrad, a Lviv region border town, will one day visit ‘Nadia,’ a Soviet-era coal mine turned into “industrial museum,” under a plan by Ukraine’s Regional Development Ministry. The project is part of a plan by the Ministry to transform mining towns into industrial parks, research centers, logistics complexes and even tourist attractions. Located one hour north of Lviv, Chervonohrad, population 65,000, has a mining college and nine coal mines. But, with coal prices low and payment of wages erratic, almost one quarter of the population left the city over the last decade — many to jobs 10 km across the border in Poland. In September, 40 miners at Nadia stayed underground for several days to protest non-payment of wages.
The government promises to pay this week $50 million in back wages owed to coal miners across the country, ruling party Rada Member Vasyl Mokan promised yesterday. About one quarter of the debt is owed to miners in Lviv, largely in Chervonohrad, Mykhailo Volynets, chairman of Ukraine’s Independent Trade Union of Miners, wrote Friday on Facebook.
Next year’s planned 30% hike in the minimum wage will be postponed five months, until Dec. 1, Finance Minister Serhiy Marchenko confirms. The increase, to $228 a month, is being delayed to keep down inflation and to reduce the government budget deficit. Many government payments are indexed to the minimum wage.
For the statistics-addicted, the State Statistics Service has launched a mobile application “Statistics in a smartphone.” Oleg Nemchinov, Minister of the Cabinet of Ministers, says the new service offers graphs and numbers for: GDP, population, labor market, prices, industry, agriculture, construction, transport, and trade.
Ukraine is discussing with Turkey the joint creation of launch vehicles for commercial launches of satellites into space, Ukraine’s Strategic Industries Minister Oleg Urusky tells Radio Svoboda. Ukraine’s Yuzhnoye Design Bureau works with Northrop Grumman to produce expendable rockets for placing satellites in low-Earth orbits. Ukraine and Turkey would need to use a third country cosmodrome, Urusky said. Until 2015, Ukraine had a project with Brazil to launch Ukraine’s Cyclone-4 carrier rockets from Brazil’s Alcântara Launch Center, near the Equator.
The prolonged coronavirus pandemic will stretch Ukraine’s economic recession through the winter, Economy Minister Ihor Petrashko predicted yesterday. But after a 3% GDP yoy drop in the first quarter, growth will resume in April, he told the Ukrainian Investment Roadshow. Growth will continue strongly, allowing Ukraine to end 2021 with 4.6% GDP growth, he said. Such a U-shaped economic recovery would cancel out the 5% GDP drop forecast for 2020.
Big government spending on infrastructure is singlehandedly pulling the construction sector into positive territory this year, according to analysis by Alfa-Bank Ukraine. Through October, construction is up by 1.9% yoy. A 10.6% rise in infrastructure investment was enough to offset a 18.7% drop in housing construction. Alfa reports: “Spending on roads more than doubled compared to the previous year.”
Overall, the government’s Big Construction’s share of GDP grew from 2.8% in the first quarter, to 10% in the fourth quarter, Mikhail Kukhar, chief economist of Ukraine Economic Outlook, said last week at a road industry forum. He said: “The decline in our country’s GDP would have been 11% in the fourth quarter, if not for the Big Construction project.” The Q4 decline is expected to be about 3.7%.
By the end of this month, the goals of the Big Construction project should be 95% complete, Kyrylo Tymoshenko, deputy presidential chief of staff, tells Interfax-Ukraine. The completion scorecard is: 200 schools and kindergartens: 93% complete; 4,000 km of state roads: 92% complete: and 100 sports facilities – 87% complete. For schools, the construction means new buildings for 8,338 students and renovated buildings for 55,000 students.
Europe’s biggest floating crane is being towed from Istanbul to Zaporizhia to complete the long-delayed bridge over the Dnipro, reports Ukravtodor. When erect, the crane rises 148 meters — nearly the height of Kyiv’s Parus office tower. The bridge complex is 9 km long. Onur, the Turkish company which is carrying out the $400 million contract to complete the bridge says part of the route will open to vehicles at the end of this month.
Since March $518 million in loans have been extended to small businesses, a factor in mitigating the impact of the coronavirus recession, the Finance Ministry reported yesterday. Under the ‘5-7-9% Loans’ program, 6,300 loans have been extended to businesses with less than $3.5 million in annual revenue. Of the total, 68% of the loan money has gone to refinance existing debt, the Finance Ministry reported yesterday. There are 23 private and state banks participating in the program.
Home mortgage loans, long a rarity in Ukraine, are up 23% yoy, totalling almost $100 million through October. The average size is for $26,000, and 87% are for second homes, reports the National Bank of Ukraine. The secondary home market is more popular because rates are lower — 14.3% — than for first homes — 17.2%.
By replacing ‘Black Friday’ sales with ‘Black Week’ sales, merchants managed to save what could have been a bleak start to the holiday season, Ukrainian bankers tell Interfax-Ukraine. Charges with Akkord bank cards were up 38% this year, compared to a 47% increased last year. At Kreditvest Bank, Chairman Vasily Nevmerzhitsky said the week over week sales were up only 20-30%. He said: “If we compare sales on Black Friday in 2019 and in Black Week in 2020, the total drop in sales was about 40%.”
By contrast, the MOYO chain of electronics stores says it doubled its sales on Black Friday. Sales were boosted partly by a 16% increase in stores, to 36, and by keeping one store in Kyiv open around the clock. MOYO CEO Valentin Ivakin said: “The number orders and their amount twice exceeded the record of 2019.”
JYSK, which has a chain of 71 furniture stores in Ukraine, recorded a 10% increase in sales in November compared to last year. Evgeniy Ivanitsa, country director of the Danish-based firm, said this increase was reached by stretching the sales over eight days and attracting 1.5 million visits to their online store.
Real wages jumped 11% yoy in October, reports the State Statistics Service. Reflecting the impact of the coronavirus epidemic, the fastest growing wages were in healthcare — up 54%. The worst performing were in hotels and restaurants, where pay was stagnant.
The national monthly average wage is $430. The highest wages are in: Kyiv City — $618; Ukraine-controlled Donetsk — $479; and Kyiv Region — $456. Of the 24 regions, wages grew the fastest in: Chernivtsi and Kherson — 21%; Rivne and Mykolaiv — 20%; Zakarpatti, Ivano-Frankivsk and Kirovohrad -019%; Ternopil —18%; Zhytomyr -17%, and Luhansk – 16%.
Concorde Capital’s Evgeniya Akhtyrko attributes “the fast growth of real wages to the minimum wage being hiked to UAH 5,000 a month starting Sept.1, relatively low consumer inflation, and the increased demand for labor amid economic stabilization.
A total renewal of the wagon fleet will generate “billions of Hryvnia of government orders for Ukrainian manufacturers, hundreds of thousands of jobs, additional GDP growth of 2% per year,” the ministry predicts. Separately, private logistics operators in Ukraine own another 50,000 wagons. Private companies complain that when Ukrzaliznytsia locomotives bring their wagons into UZ workshops, they are often cannibalised for parts, usually brake pads. Last week, UZ signed the first contract with a private company — Lviv-based Ukrainian Locomotive Company — to haul cargo on UZ tracks.
Cracking down on overloaded trucks, the National Police checked 75,000 trucks last month, almost four times the number of checks performed in November of last year. So far this year, police have 665,000 trucks, almost double last year. With about 2% of trucks fined for violating weight restrictions, fines this year have totalled $4.5 million. By this time next year, there are to be 150 ‘Weight-in-Motion’ devices installed on Ukraine’s highways.
Air cargo through Kyiv-Boryspil is down by only 10% through November, compared to the first 11 months of last year. Air cargo dropped to 33,400 tons, Anton Borisyuk, the airport’s strategic development director said Thursday. By contrast, through October, passenger traffic was down by two thirds, hitting 4.5 million. Transfer passengers were down by 85%, passengers on regularly scheduled flights were down by 78%, and charter passengers were down by 40%.
In a bid to unlock billions of dollars in low interest IMF loans, the Rada restored accountability for false asset declarations, albeit a watered down version. Approved Friday, the new bill raised the limit for ‘forgetting’ an asset 9-fold, essentially from a car to a house. Officials who are not caught in two years, get off free. Fines range from $1,500 to $3,000. The possibility of imprisonment is lifted.
Anti-corruption groups have protested. President Zelenskiy wrote on Facebook: “It is a pity that the responsibility is still not as tough as we would like.” But he made clear he would sign the compromise bill. There was no comment from the IMF.
Ukrainian bonds are among the best performing in emerging markets in the post-US-election rally, reports Tellimer Research. “Sovereign bonds lead the way, tightening 100-150bps in November and outperforming EM indices, despite uncertainty over IMF funding and the devastating effect of coronavirus on the Ukrainian economy,” writes analyst Kiti Pantskhava. Among the corporates, Kernel and Metinvest are the best performers.
Russia restarted construction of the Nord Stream 2 gas pipeline on Saturday, Ukraine’s Hromadske television channel reports, citing a document from the Germany’s Federal Maritime and Hydrographic Agency. Work on the Russia-Germany trans-Baltic line stopped almost one year ago due to US sanctions. To get around sanctions, the pipelines company is using Russian ships in an effort to finish the 1,222 km pipeline, which is 90% complete.
Germany’s government sees US sanctions against Nord Stream 2 as illegal and does not predict any change under a Biden administration, German Foreign Minister Heiko Maas tells Der Spiegel. “”We have no illusions. There are almost no differences between Republicans and Democrats on this issue,” he said. He attributed US opposition to the pipeline to US interest in selling liquefied natural gas to the EU. A direct Russia-Germany pipeline would render the existing pipeline across Ukraine redundant, depriving Ukraine of $2-3 billion in annual transit fees.
With Britain apparently heading toward a ‘hard Brexit’ three weeks from now, Ukraine is asking the UK to negotiate a bilateral trade deal to lower tariffs. On Friday, Prime Minister Shmygal asked UK Ambassador Melinda Simmons to start trade talks this month, even before the new bilateral trade treaty is ratified by the Rada. Signed in October by President Zelenskiy, the new trade treaty essentially continues on a bilateral level the trade rules that already exist for the UK as part of the EU.
Representatives of over 100 Ukrainian companies took part remotely in a China-Ukraine investment fair, hosted in Beijing, reports china.org.cnnews site With almost 300 Chinese and Ukrainian business and government officials participating, the annual conference took on new importance this year with the emergence of China as Ukraine’s top trading partner. At the conference, the China-Ukraine Bilateral Entrepreneurs Council announced the establishment of a liaison office in Harbin, capital of northeast China’s Heilongjiang province. Harbin mayor Sun Zhe said his city has worked well with Ukraine in such fields as aerospace, new materials and modern agriculture.
Huawei Ukraine is helping the Digital Transformation Ministry open a center “for students and future entrepreneurs” at Kyiv’s Taras Shevchenko National University. “This initiative opens up new opportunities for the development of talent in the digital world,” said Ding Ning, Huawei’s deputy director of supply and service. Last July, Ding signed an agreement with Kyiv Polytechnic Institute to open an “Academy of Information and Web Technologies.” KPI wrote on its Facebook page: “The University will become a platform for promoting Huawei technologies and ideas on the Ukrainian market. Huawei company cooperates with more than 900 universities overseas on opening ICT academies authorised by Huawei.”
For the first time since Independence, Ukraine’s Defense Ministry is about to order new planes from Antonov, Strategic Industries Minister Oleh Urusky tells Radio Svoboda. “A contract will be signed between the Ministry of Defense and the Antonov State Enterprise for three An-178 aircraft, which will be the first time in Ukraine since independence,” he says. “We have never ordered new planes.” An-178 is a Ukrainian medium-haul transport jet with a range of 3,680 km, cargo load of 18 tons, and capacity to carry 90 soldiers. Turkey and Antonov are negotiating joint production of the An-178. During the summer of 2014, at the height of the Ukraine-Russia air war over the Donbas, three Ukrainian Air Force transport planes were shot down — an Antonov An-26, an Antonov An-30 and an Ilyushin Il-76.
Calling the condition of the state railroad’s freight wagons “catastrophic”, the Cabinet of Ministers has adopted a “program of radical renewal” — replacing all 63,000 in the state fleet over this decade, reports the Ministry of Economic Development, Trade and Agriculture. With some wagons dating back to the 1960s, more than 90% of the wagons are past their service life. Noting that 24,000 used wagons have been imported in recent years from Russia, the Ministry warns that Ukraine risks “becoming a place for railway scrap written off by neighboring countries where operating restrictions apply.”
The Zelenskiy administration’s effort to get back on track with the IMF hit an unexpected bump when Oleg Tatarov, deputy head of the administration, said Saturday that the National Anti-Corruption Bureau does not serve Ukraine’s interests and that its head Artem Sytnyk doesn’t have “the moral right” to run the agency and should be replaced. The next day, the Zelenskiy administration hurried out a statement saying Tatarov’s statement was: “His personal opinion that does not reflect the administration’s official position.”
The Anti-Corruption Bureau was created with Western advice and financing. Ukrainian officials have repeatedly assured the IMF that it will be retained. Two weeks ago, Zelenskiy met with G7 ambassadors and assured them that Sytnyk would stay on the job. Next week, the Rada is to vote on a bill that would guarantee the Bureau’s survival and Sytnyk’s role as head. In Washington, analysts predict that the Biden administration will use ‘tough love’ on Ukraine — conditioning support on free market, EU-standard reforms.
Ten Turkish and Ukrainian construction companies have applied to take part in the $200 million rebuild of Dnipro airport, reports Kyrill Khomyakov, head of Ukrinfraproekt, the State Agency for Infrastructure Projects. Qualified companies are to take part in a competitive tender. Expected to take several years, the project involves building a new concrete runway, jet taxiing aprons, lighting, navigational aids and a perimeter fence. Next year’s budget has allocated $50 million, or one quarter of the money.
Controlled by the Ihor Kolmoisky group, Dnipro airport has languished, recording Ukraine’s 7th largest volume of passengers last year. In 2019, Dnipro handled 338,888 passengers, sandwiched between Zaporizhia, at 434,000, and Kherson at 154,046. Separately, Infrastructure Minister Vladyslav Krykliy reported Sunday from Istanbul that a Turkish construction company wants to modernize Kherson airport, which is served by Turkish Airlines.
In Switzerland, airplane pilots who are unable to fly during the coronavirus pandemic may soon retrain to become train drivers. With the support of Aeropers, the nation’s main union for cockpit employees, Swiss Federal Railways and Edelweiss Air are studying a pilot retraining. While dozens of jets are grounded in Switzerland this winter, the state-owned railroad is cancelling trains due to lack of staff. Converting a jet pilot into a locomotive engineer is expected to take less than one year.
In Berlin, DHL has painted its trademark yellow and red colors on 10 idle tour buses and converted them into ‘paketbussen.’ The parcel buses, including six double deckers, will receive and deliver packages to customers standing outside, minimizing contagion. Logistik Watchblog quotes Berlin’s Governing Mayor, Michael Müller, saying: “The parcel business, which will reach a new dimension due to the corona Christmas, is specifically facilitated with the paketbussen. It helps us to further reduce contacts.”
China has roared ahead of Russia to account for twice as much of Ukraine’s trade this year, reports the State Statistics Service. For this year through August, China-Ukraine two-way trade totaled $9.4 billion. Russia trade totaled $4.8 billion. Germany was just behind, with $4.6 billion. The next four were: Poland — $4.5 billion; Turkey — $2.9 billion; Belarus — $2.5 billion; and United States — $2.5 billion.
DHL will create “a powerful logistics center” in Kyiv’s left bank Liski rail hub for container trains going to and from China, Ukrzaliznytsia CEO Volodomyr Zhmak writes of a memorandum of cooperation signed Friday between the state railroad and DHL Global Forwarding. To open up new east-west routes, UZ is finalizing similar agreements with BTLC Germany and Poland’s PKP Cargo Connect. To promote the rail hub near the Darnytsia rail station, Zhmak appointed last month Edvins Berzins, former chairman of Latvian Railways, to be executive director of what is formally called the Liski Transport Service Center. After starting last June, container trains now run almost weekly from China to Liski. Around Ukraine, there are now 36 routes regularly plied by container trains.
In “U.S., Russia Race to Outflank Each Other on Russian Pipeline,” Wall Street Journal reporter Brett Forrest recounts the down to the wire race to stop the Nord Stream 2 trans-Baltic gas pipeline, a line seen as rendering Ukraine defenseless against full-fledged Russian intervention. In the 1,800-word story, one villain emerges: US Treasury Secretary Stephen Mnuchin. Forrest writes: “Mr. Mnuchin, whose department enforces sanctions, was opposed, these former officials said. ‘He was a big hang-up at every turning point,’ said one.” Two Washington lobbyist heroes emerge: Vadym Glamazdin, a government-relations official with Naftogaz, and Oleksandr Kharchenko, an official at Ukraine’s National Security and Defense Council.
A bounty of mushrooms flowed out of Ukraine’s forests this fall, reports The New York Times, citing unusual weather: “a dry summer followed by an unusually warm fall and late first frost.” In “I Have Never Seen So Many Toadstools.’ A Bumper Crop of Mushrooms in Ukraine,” Times reporters interviewed Emilia Koleda, a grandmother selling mushrooms on the Kyiv-Chernihiv highway. Noting that her mushroom sales earned her money for firewood and school supplies for her grandchildren, said says: “Mushrooms saved so many people this year…Nature helped us through the quarantine.” Befitting the secrecy of mushroom hunters, the reporters chose as their dateline a Chernihiv settlement so tiny it does not appear on google maps.
With the Democrats returning to power in the White House, David Arakhamia, head of the Servant of the People Rada faction, hopes that Joe Biden will resume an Obama era practice of extending US guarantees to $1 billion in Ukrainian 5-year Eurobonds. The Obama Administration did this three times at the height of Ukraine’s post-Maidan financial crisis – in May, 2014, in May, 2015 and on Sept. 23, 2016, just before the election that brought in Donald Trump. With the US guarantee, the last bond carried the lowest rate in Ukraine’s history — 1.471%. With Ukraine’s reserves recovering the Trump Administration refused to refinance the first two issues. They were repaid in full.
Ukraine’s faces a bulge in repayments next fall, and Arakhamia tells Interfax-Ukraine that he hopes a Biden Administration will roll over the $1 billion bond coming due in September. “We hope that with the arrival of the new White House administration, we will be able to agree with our strategic partners on refinancing this loan,” Arakhamia tells the news agency. Ukraine’s international reserves are $24.5 billion.
“No IMF funding for Ukraine until Zelenskiy earns trust,” headlines a stinging critique of the Zelenskiy government by Anders Aslund, the Swedish-American economist who has been watching Ukraine for 30 years. “If the Ukrainian government does not fundamentally revise its current economic policy and political trajectory, it is unlikely to receive any IMF, World Bank, or European Union funds for as long as Volodymyr Zelenskiy remains president,” Aslund writes in an Atlantic Council Ukraine blog. “Zelenskiy does not appear to grasp that the IMF takes its conditions seriously and does not want to be treated as just a source of cheap credits. Unlike the Ukrainian government, it is focused on structural reforms so that the Ukrainian economy can start growing at five to eight percent a year, rather than at minimal rates.”
With the minimum monthly wage set to rise to $182 (UAH 5,000) next Tuesday, Zelenskiy says the budget can “definitely support” the hike. On July 1, the minimum wage is to increase by 30%, to UAH 6,500, currently $237. Ukraine’s median monthly wage is $768.
Grain sales were down 18% yoy in July, reports UNIAN citing the Ministry of Economic Development, Trade and Agriculture. Due to bad weather, much of the harvest is late.
Steelmaker ArcelorMittal has transferred 50 million tons of slag to the government for the national road construction program, reports Interfax-Ukraine, citing the company. Earlier this year, Arcelor pushed the government to change regulations to allow construction of concrete roads with slag. Increasingly common across Europe, the use of crushed slag for road construction helps companies cut disposal costs. In turn it cuts costs for building concrete roads. So far this year, 100,000 cubic meters have been used to build roads in Donetsk, Dnipropetrovsk, Kharkiv and Zaporizhia regions. The goal is to use almost 500,000 tons this year for roadbuilding.
Interpipe, Ukraine’s largest pipe and wheel producer, will redeem at par 97 million of its 2024 notes this week, according to the company.
IKEA Ukraine plans to offer 5,000 items in its first physical store in Kyiv, says Florian Melle, Ukraine director of Ikea. He said: “A city-format store will open in Kyiv without a food department and restaurant, but we strive to launch them as soon as possible.” Earlier this year, IKEA started operating an online store that proved so successful that the company struggled to keep up with orders. Ikea’s first physical store in Ukraine is to open in Kyiv’s Blockbuster Mall by the end of this year.
Energy traders imported 345,000 megawatts of electricity in the first quarter of 2020, reports NERC. The imported electricity was from Slovakia, Hungary, Romania and Belarus.
New car imports are down 36% y-o-y, reports Ukrinform citing Ukravtoprom. The average value of an imported new car is $19,300. Japanese vehicles are the most popular.
Passenger transport is down 56.2% y-o-y, reports the State Statistics Service. Rail was down 58.2%. Motor transport was down by 44.3%.
There have been no combat losses in the eastern regions for the past 29 days, Zelenskiy said during his Independence Day speech. “A year ago, I talked about how every morning starts with an SMS message from the General Staff of Ukraine. SMS about the number of wounded and dead for the past day on the front line. The numbers are different, but only one message makes the morning good: wounded – zero, dead – zero. Today, for the 29th day in a row, is a really good morning for me and our whole Ukraine. Yes, we face many new challenges. But today is 29 days since we have no combat losses in the east of Ukraine.”
The IMF has yet to set a date for the review of the Standby Agreement, a review that was to be in September. IMF Ukraine representative Goesta Ljungman tells Hromadske that while “discussions on the implementation of the parameters and indicators of the liquidity program are ongoing, the The IMF has yet to set a date for the review of the Standby Agreement, a review that was to be in September. IMF Ukraine representative Goesta Ljungman tells Hromadske that while “discussions on the implementation of the parameters and indicators of the liquidity program are ongoing, the date of the IMF mission on the first revision of the program has not yet been determined.”
Ukraine received in June a first $2.1 billion tranche of what is to be a $5 billion loan program.
Prime Minister Shmygal says he expects Ukraine will receive the second tranche by the end of this year. Some economic analysts say the IMF switched to observation mode after President Zelenskiy unexpectedly switched the central bank leadership within a month of getting the first IMF tranche.
International reserves reached a new high this month at $28.8 billion, according to the National Bank of Ukraine. Boosted by the IMF tranche, this is the highest level in eight years.
Mykolaiv’s shipbuilding industry is to be revived with a government program designed to create 25,000 new jobs, President Zelenskiy and David Arakhamia, leader of the Servant of the People Rada, promised on a visit Friday to a city that was the Soviet center for shipbuilding in the Black Sea. “We want to restore the former glory of the city of shipbuilders,” Arakhamia said, referring to Mykolaiv whose modern history dates back to the creation of a Russian Navy shipyard in 1789.
The government promises “a national program to support shipbuilding, cheaper credit resources,” Arakhamia said. Later on Friday, Oleh Uruskyi, Minister for Strategic Industries visited the Okean shipyard in Mykolaiv, reported the company website.
Business education for combat veterans and soft loans for veteran-owned startups are government priorities, President Zelenskiy said during an International Volunteer and Veterans Forum in Kyiv. “It’s both military skills and the rules by which all successful companies exist,” he said. “One cannot ignore the experience of other countries, where many veterans are the founders of large, serious, powerful, well-known companies.”